Correlation Between Sable Offshore and Summit Therapeutics

Can any of the company-specific risk be diversified away by investing in both Sable Offshore and Summit Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sable Offshore and Summit Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sable Offshore Corp and Summit Therapeutics PLC, you can compare the effects of market volatilities on Sable Offshore and Summit Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sable Offshore with a short position of Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Summit Therapeutics.

Diversification Opportunities for Sable Offshore and Summit Therapeutics

0.43

Correlation Coefficient

Sable Offshore  Summit Therapeutics

Very weak diversification

The 3 months correlation between Sable and Summit is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Summit Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Therapeutics PLC and Sable Offshore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sable Offshore Corp are associated (or correlated) with Summit Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Therapeutics PLC has no effect on the direction of Sable Offshore i.e., Sable Offshore and Summit Therapeutics go up and down completely randomly.

Pair Corralation between Sable Offshore and Summit Therapeutics

Considering the 90-day investment horizon Sable Offshore is expected to generate 1.4 times less return on investment than Summit Therapeutics. But when comparing it to its historical volatility, Sable Offshore Corp is 1.47 times less risky than Summit Therapeutics. It trades about 0.23 of its potential returns per unit of risk. Summit Therapeutics PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,928  in Summit Therapeutics PLC on October 27, 2024 and sell it today you would earn a total of  448.00  from holding Summit Therapeutics PLC or generate 23.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sable Offshore Corp  vs.  Summit Therapeutics PLC

Sable Offshore Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

Summit Therapeutics PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Therapeutics PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Summit Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sable Offshore and Summit Therapeutics

The main advantage of trading using opposite Sable Offshore and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore position performs unexpectedly, Summit Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Summit Therapeutics will offset losses from the drop in Summit Therapeutics' long position.

The idea behind Sable Offshore Corp and Summit Therapeutics PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.